BitMart founder dismisses calls for audit as users report blocked funds, unpaid employees
BitMart founder Sheldon Lee rejected as 'fabricated rumors' an X post alleging blocked customer withdrawals and unpaid July salaries, claiming the exchange's Chinese-language account was hacked. Critics including onchain investigator ZachXBT and distressed investment firm…
Intelligence analysis by Llama
BitMart is winding down with a final trading day set for Aug. 26, but users say withdrawals remain frozen and staff have gone unpaid since the July 26 announcement. Founder Sheldon Lee is dismissing the complaints as the work of a hacked account while refusing calls for a third-party audit.
Imagine a giant piggy bank that lots of kids put their allowance into, and the person running it says it's closing down. Some kids say they can't get their money out, and the helpers who work there say they haven't been paid either. The person in charge says the messages complaining about this were fake, but the kids and a money detective are asking for someone neutral to look inside the piggy bank and prove the money is really there.
Analysis
The Aug. 19 deadline and a 'hacked' Chinese-language account
The dispute hinges on a single post from BitMart's Chinese-language X account, which Lee has labeled as compromised rather than engage with point by point. The post set a hard deadline of Aug. 19, demanding that Lee and business partner Yi Li disclose wallets, assets, liabilities and usable reserves to independent verification, and warning that failure to respond would result in all available data being forwarded to law enforcement, regulators, lawyers and the media worldwide. Lee's only substantive reply was that the content was "fabricated rumors" and that the company would file a police report and send a lawyer's letter to X during US daytime hours. The procedural choice of contesting the channel rather than the substance has done little to settle anxious users, several of whom told the same story: withdrawals stalled on or near the July 26 wind-down announcement and have not resumed.
Echo Base's restructuring offer and the case for a court process
Roshan Dharia, CEO of distressed investment firm Echo Base, told CoinDesk that his firm has already proposed a funded restructuring package for BitMart, including debtor-in-possession financing and emergence equity, underwritten by Echo Base as a claimholder, and that the exchange has not responded. Dharia framed the impasse in structural terms: a custodial book of this size cannot be resolved consensually because the retail customer base is too dispersed to be reliably notified, meaning every missed user keeps an enforceable claim in full. In his reading, the only paths forward are BitMart voluntarily entering a court process with a funded sponsor, or being dragged there by its own claimants. The fact that a would-be DIP lender is publicly disclosing terms and receiving silence is itself a data point about the state of the company's books.
ZachXBT, the $10 million Telegram removal and the credibility gap
The onchain investigator ZachXBT pressed the simplest version of the question, telling Lee that if liquidity genuinely exists, the proof is returning funds rather than issuing "vague statements." Individual users sharpened it further. An account called BeardStaff said assets had been inaccessible since the July 26 announcement and that a dedicated VIP manager removed them from Telegram the same day withdrawals stalled, posting: "Where is my $10 million?" Another user, @chicha_liam, rejected the hacked-account defense outright, writing that no one had asked about the hack and that the only relevant question is when withdrawals resume. With the final trading day now less than two weeks away on Aug. 26 and a Cayman Islands corporate structure shielding the firm from public reporting requirements, the gap between Lee's framing of routine wind-down and users' framing of a frozen custodial estate is widening, not closing.
Key points
- BitMart founder Sheldon Lee dismissed as 'fabricated rumors' an X post alleging frozen customer withdrawals and unpaid July salaries, calling it the work of a hacked Chinese-language account.
- The post gave Lee until Aug. 19 to open wallets, assets, liabilities and reserves to independent verification, with a threat to escalate to law enforcement and regulators if unanswered.
- Onchain investigator ZachXBT told Lee that liquidity claims are best proven by returning funds rather than issuing 'vague statements.'
- Distressed investment firm Echo Base said it has offered a funded restructuring package including debtor-in-possession financing, but BitMart has not responded.
- BitMart announced last month it would wind down operations, with Aug. 26 set as the final trading day, though users say withdrawals have been blocked since the July 26 announcement.
If BitMart engages with Echo Base's offer and submits to a court-supervised restructuring, customer claims could be honored in an orderly way and the company could wind down with its reputation partly preserved. A prompt, verifiable onchain proof of reserves from Lee would also defuse the standoff before the Aug. 19 deadline.
If withdrawals remain frozen past Aug. 26 and the audit demand is ignored, the matter will likely migrate to regulators and litigation, leaving retail users to pursue individual claims against a Cayman Islands entity with no public reporting obligations. The pattern echoes previous exchange failures where dispersed retail claimants recover only a fraction of their balances.
